Articles Posted inFamily Issues

What is estate planning, really? I know that most lawyers focus on reducing taxes, or the creation of documents, but when you get down to it, what you’re really doing when you make an estate plan is giving everything away, right?

So, to me, understanding the practice of generosity and what gets in the way of being generous are central to effective estate planning, and who better to explore that territory than my guest for episode 3 of Life/Death/Law: Myoshin Kelley, an eloquent teacher on the key Buddhist teachings on the wisdom of opening the heart. Myoshin is a Senior Instructor with the Tergar Community, which supports the worldwide vision of Tibetan master meditation teacher and author Mingyur Rinpoche, tergar.org, and it is an honor to have her on the podcast.

If you’ve ever been curious about the practice of generosity or the value of it, or found yourself wanting to be generous but somehow holding yourself back, and wondered what was getting in your way, please listen.

It’s almost Christmas, so, in the holiday spirit, I’m taking a look at a difficult, Home-For-The-Holidays moment — you get home and realize that your parents just seem…. a little bit different, just not the same as they used to be–more forgetful, more agitated, or suddenly involved with people that you don’t know or trust.

Join me for a candid discussion with Dr. Elizabeth Landsverk, a board-certified physician in Internal medicine, Geriatric medicine, and Palliative care medicine. She’s also the founder of ElderConsult Geriatric Medicine, a practice that offers house-call based medicine to seniors and their families.

Welcome to my new podcast, Life/Death/Law, where I explore the intersection of life, death, law (and love)–otherwise known as estate planning.

In this first episode Emily Bouchard, a family dynamics and money coach and the managing partner at Wealth Legacy Group, talks to me about money and the difficulties that families often have in engaging in honest conversations about it. Emily offers fascinating insights into why money can be such a hard thing to talk about, and tips for helping to get these conversations started. I asked her to be on my show because, so often, a long, uncomfortable silence falls across the room when my clients begin to sort out who owns what in a marriage, or how parents want their children to treat an inheritance. As Emily points out, avoiding open and honest communications about money (like avoiding the same kinds of conversations about death and illness) means a missed opportunity for learning about ourselves, our families, and our most closely held values and hopes. I hope you enjoy it.

A few months ago, the New York Times published an article entitled, “Single? No Children? No Will? Big Mistake.” I’ve been meaning to write about it ever since. The author writes, “Certain people never reach one of those obvious points in their lives to write one. If you are unmarried in middle age, do not have children and have never had a devastating disease or brush with death, making plans for what happens to your stuff if you’re not around may not feel pressing.”

The author is so right. I have met many people who somehow feel that, because they don’t have children, they don’t need an estate plan. But here’s the thing — people without children may have even MORE need to make a plan that those with kids.

For one thing, all of us, at some point, are going to get sick or otherwise incapacitated, and need someone to act on our behalf — to pay bills, maintain our homes, or make medical decisions. Estate planning is not just about transferring assets when you die, it is also about planning for incapacity. And everyone needs to do that.

I was recently at a friend’s house, and, accidentally made someone’s day. This is not a usual occurrence for me, but I did enjoy it. Here’s what happened: a woman that I didn’t know told me that she had inherited her parents’ house in Berkeley. Because she had inherited it from her parents, she also was able to keep their very low property tax rate. Her problem was that she thought that she’d like to sell that house and buy a new one, but was worried that her property tax rate would skyrocket as a result.

Here’s what she didn’t know: if she waits until next year, when she turns 55, and purchases a new home that’s worth the same or less than the residence that she is selling, and buys the new house within two years of selling the old one, she can keep her old property tax base for the new house. She has to sell her old house to a new owner so that the new home can be reassessed for property tax purposes and she has to file a claim for exclusion from reassessment on the new property within three years of the purchase. In tax language, this is called “transfer of base year value,” which is the value that the county assessors use to calculate the property tax owed each year.

This is a one-time exclusion from reassessment for those over 55. So, the next time she sells her home and buys a new one, her property taxes will go up. Proposition 60, passed in 1986, established this exception for intra-county transfers–that’s Latin for WITHIN a county. So, if my new acquaintance stays in Alameda county, and otherwise follows these rules, she won’t be reassessed.

New parents face so many new challenges–from figuring out how car seats work to figuring out how babies work. I remember taking a deep breath as we opened the door of the hospital, loaded our daughter into the car (including several annoying moments in the parking lot trying to gently put her new born and limp body into the brand new car seat) and out into a whole new world.

Part of that world includes estate planning. I built my practice, in the early days, by giving workshops at preschools, parenting groups and new parent groups at all of the local hospitals. New parents are often sleep deprived, terrified, and overwhelmed. But here’s what I told them, over and over again — you don’t have to do everything now, just put the basics in place and promise yourself to revisit your estate plan in a few years, when you are getting some sleep.

Custodial accounts are an easy way to hold money for a minor child’s benefit. They have many advantages. They’re free-it’s easy to open up a custodial account at any bank or financial services company. (You’ll know if an account is custodial in California because it will say “CUTMA” on the statement, which stands for California Uniform Transfers to Minors Act.)

They’re simple-a custodial account can hold cash, or other assets, for the benefit of a minor until a certain age (in California, until age 21 if the account is established during life; 25 if created by a Will or a trust after a death). They work as intended – when the property is transferred to the CUTMA account, the child becomes the legal owner, but has no control over the money until the account ends, when they are old enough, presumably, to properly manage it. Until that time, the account’s custodian can use the money for that child’s benefit.

But what do you do if they get too big? I’ve had more than one client come into my office terrified because their children are going to inherit hundreds of thousands of dollars way before their parents think that would be a good idea. Some of you are, no doubt, rolling your eyes in mock horror, but this can be a source of great stress for parents. Imagine, for example, that a well-meaning grandparent bought Pretend Co. stock when it was at $7/share (in 2002) and gave 2000 shares of stock to a custodial account for your child. Fourteen years later, that stock is now worth $104/share and worth $208,000! And your adorable child is now a goofy 17 year old, interested more in texting, dating, and driving than careful investing.

It’s summer and families are on the move. Some of them are crossing borders. And it turns out that in this day and age, in addition to passports, tablets, and endless patience, parents also need to consider whether or not they’ll need a permission letter as well.

If you are traveling internationally with minor children and are either doing it solo, or are not the child’s parents, be prepared to be asked for a document showing that you have permission to do so.

A Minor Travel Consent Form has become an increasingly necessary document. Here’s how the US Customs & Border Protection Service puts it on their website: “Due to the increasing incidents of child abductions in disputed custody cases and as possible victims of child pornography, Customs and Border Protection strongly recommends that unless a child is accompanied by both parents, the adult have a note from the child’s other parent (or, in the case of a child traveling with grandparents, uncles, aunts, sisters or brothers, friends or in groups, a note signed by both parents) stating “I acknowledge that my wife/husband/etc. is traveling out of the country with my son/daughter/group. He/She/They have my permission to do so.”

On October 5, 2015, Governor Brown signed the End of Life Option Act into law. The law requires that two doctors determine that a patient has six months or less to live before the lethal drugs can be prescribed. Patients also must be mentally competent to make medical decisions and be able to swallow the medication themselves and must affirm in writing, 48 hours before taking the medication, that they will do so.

But the law, when passed, wasn’t to become effective until 91 days after the adjournment of a special legislative session on health care, and no one knew exactly when that was going to happen. Now we do. That session ended on March 10, 2016, which means that the law will be effective as of June 9, 2016.

Since this is a new law and a new policy for the state, it is going to take time for both the public and doctors to fully understand how the process is going to work and what the legal requirements are for compliance.

If the answer to that question is, “N0!” you are in good company. A recent survey by Caring.com of 1,000 adults found that less than half of the adults surveyed (45.8%) knew where their parents’ documents were.

When asked if they even knew whether or not their parents had an estate plan in place, only about half (55.4%) said that they did.

When asked if they knew the contents of their parents’ estate plans, only 42% said that they knew what was in those plans.

Podcasts

Call Liza at (669) 232-0872 with your podcast or blog questions, or suggestions for future blog posts or podcast episodes, or email lifedeathlawpodcast@gmail.com. I will answer your questions if I can on future posts or episodes.